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Media Alerts - Rush v. Sport Chalet, Inc. - Ninth Circuit
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March 31, 2015
  Rush v. Sport Chalet, Inc. - Ninth Circuit
Headline: Ninth Circuit panel holds that before district courts dismiss, rather than sever, claims against co-defendants for improper joinder, they must first conduct a "prejudice analysis" to determine whether such a dismissal will prejudice the plaintiff's otherwise viable claims against each co-defendant, including whether new suits will be blocked by the statute of limitations.

Area(s) of Law: The Federal Rules of Civil Procedure: Rule 20(a)(2) Permissive Joinder of Parties, Rule 21 Misjoinder and Nonjoinder of Parties.

Issue Presented: Whether two defendants share the "same transaction [or] occurrence," when they are in a landlord-tenant relationship and, therefore, can be permissibly joined as co-defendants in a lawsuit. Whether it is appropriate for a court to dismiss lawsuits against improperly joined co-defendants, rather than severing the claims and allowing separate suits to proceed, when this will cause prejudice to the plaintiff.

Brief Summary: Plaintiff Sandi Rush sued three stores, Babies "R" Us, Petsmart, and Sport Chalet; as well as their collective landlord, Foothill Ranch LLC; for violations of the Americans with Disabilities Act ("ADA"). Prior to the hearing, one of the stores, Babies "R" Us, settled with Rush, and Rush filed a notice of dismissal as to that defendant..

The district court subsequently issued an order sua sponte that held that the remaining defendants were improperly joined under the Federal Rules of Civil Procedure Rule 20, Permissive Joinder of Parties, as Rush's claims against the landlord and the other stores did not arise out of the same transaction or occurrence or series of transactions or occurrences as her claims against Babies "R" Us. Pursuant to its discretion under Rule 21 (Misjoinder and Nonjoinder of Parties), the district court dismissed all claims against the remaining co-defendants.

Reviewing the district court's misjoinder decision de novo, the panel reversed the district court's holding that the landlord, Foothill Ranch, was properly joined under Rule 20. Reviewing for abuse of discretion the district court's dismissal of the remaining co-defendants under Rule 21, the panel ruled that the district court's dismissal was improper and vacated it's decision to dismiss rather than sever the remaining defendants.

The panel held that, since Foothill Ranch and Babies "R" Us were in a landlord-tenant relationship, this would satisfy the "common transaction or occurrence" requirement under Rule 20. The panel also decided that the district court may have correctly decided that Sports Chalet and Petsmart were misjoined because the plaintiff's injuries injuries at each store are "distinct and independent from one another, and she has not alleged any legal relationship between them." Nevertheless, the panel determined that the court abused its discretion by severing and dismissing plaintiff's claims against them.

In taking this action, the panel adopted the rule many fellow circuits follow. Rather than sever and dismiss, a district court must first conduct a "prejudice analysis" to determine whether a dismissal will harm the plaintiff by, for instance, causing "loss of otherwise timely claims if new suits are blocked by statutes of limitations."

The panel reversed and remanded with instructions that the district court should examine whether allowing two separate severed complaints to proceed would be necessary to avoid prejudice to Rush.

Extended Summary: Plaintiff Sandi Rush qualifies as physically disabled under applicable federal and California Law. Rush alleged she encountered physical barriers at three retail stores; Sport Chalet, Inc., Petsmart, Inc., and Babies "R" Us, which are all located in the same shopping mall, at 26532 Towne Center Drive, in Foothill Ranch, CA. These physical barriers allegedly limited her access to these stores in violation of the Americans with Disabilities Act ("ADA").

Rush filed an ADA complaint against the stores, as well as the landlord of the shopping center, Foothill Ranch, LLC, on May 14 2012.

Rush settled her claims against Babies "R" Us and filed a notice of dismissal under Rule 41(a)(1) on October 3, 2012. Six days later, October 9, 2012, the district court held sua sponte "the various Defendants are improperly joined," as Rush's complaint did not allege her injuries arose "out of the same transaction, occurrence, or series of transactions or occurrences," as required for permissive joinder under Rule 20. Therefore, the district court severed and dismissed without prejudice Rush's claims against the remaining defendants pursuant to its discretion under Rule 21..

The court reviewed de novo the district court's ruling that defendants were improperly joined, and the district court's decision to sever and dismiss Rush's claims against the remaining defendants for abuse of discretion.

The court found that Foothill Ranch, and Babies "R" Us were properly joined. The court reasoned that, under Rule 20, defendants are permissively joined when the claim or claims arise out of the same transaction or occurrence and if there is a question of law or fact common to the defendants. Here, the common transaction or occurrence was the landlord-tenant relationship between Foothill Ranch and Babies "R" Us. The panel cited to Botosan v. Paul McNally Reality, 216 F.3d 827, 834 (9th Cir. 2000), which held "the landlord is a necessary party in an ADA action, regardless of what the lease provides." The panel held that, since Foothill Ranch was properly joined to Rush's claim against Babies "R" Us, Rush's claims against Foothill Ranch remained viable even after Babies "R" Us' dismissal from the suit. Therefore, the court held Foothill Ranch was improperly dismissed from her suit by the district court.

Regarding Sport Chalet and Petsmart, the court conceded the district court may have been correct in holding they were not properly joined, as any injuries encountered at each establishment would have been distinct and peculiar to that establishment, and Rush did not allege any legal relationship between the three stores. However, the court found the district court abused its discretion in dismissing Rush's complaints against Sport Chalet and against Petsmart, as the district court did not evaluate any prejudice this dismissal might cause Rush.

The court adopted the rule favored by many circuits "that district courts who dismiss rather than sever must conduct a prejudice analysis, including 'loss of otherwise timely claims if new suits are blocked by statutes of limitations.'"

The court therefore vacated and remanded, directing the district court to evaluate whether allowing two severed complaints to remain Sport Chalet and Petsmart, each with Foothill Ranch as co-defendant, would be necessary to avoid prejudice to Rush.

For the full opinion:

Panel: Stephen Reinhardt, Ronald M. Gould, Circuit Judges, and J. Frederick Motz, Senior District Judge.

Date of Issued Opinion: March 3, 2015

Docket Number: 12-57253\

Decided: Reversed and remanded with instructions.

Case Alert Author: Michael Zatlin.

Counsel: Scottlynn J. Hubbard, IV (argued), Law Offices of Lynee Hubbard, Chico, California; Anthony M. Bettencourt (argued), Disabled Advocacy Group, Chico, California, for Plaintiff - Appellant, Henry A. Platt and Robert L. Duston, Saul Ewing LLP, Washington, D.C., for Defendant - Appellee Foothill Ranch.

Author of Opinion: Motz, Senior District Judge.

Case Alert Circuit Supervisor: Professor Glenn Koppel.

    Posted By: Glenn Koppel @ 03/31/2015 02:00 PM     9th Circuit  

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